Why Capitalism Goes Through Crises

Scan page 17

Ever since 1825 or so, after the capitalist system of production had rapidly expanded from its beginnings in the cotton cloth industry in England to dominate Britain and spread to other countries, the world has experienced the phenomenon of periodic economic crises.

These crises have been given various names-"panics," "depressions," and "recessions" being some-but they all refer to the same thing. Karl Marx and Frederick Engels described what these crises are like in the "Communist Manifesto" of 1848:

"Modern bourgeois society with its relations of production, of exchange and of property, a society that has conjured up such gigantic means of production and of exchange, is like the sorcerer who is no longer able to control the powers of the nether world whom he has called up by his spells...

"It is enough to mention the commercial crises that by their periodical return put the existence of the entire bourgeois society on trial, each time more threateningly. In these crises a great part not only of the existing products, but also of the previously created productive forces, are periodically destroyed. In these crises there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity—the epidemic of overproduction. Society suddenly finds itself put back into a state of momentary barbarism; it appears as if a famine, a universal war of devastation had cut off the supply of every means of subsistence; industry and commerce seem to be destroyed. And why? Because there is too much civilization, too much means of subsistence, too much industry, too much commerce...

"And how does the bourgeoisie get over these crises? On the one hand, by enforced destruction of a mass of productive forces; on the other, by the conquest of new markets, and by the more thorough exploitation of the old ones. That is to say, by paving the way for more extensive and more destructive crises, and by diminishing the means whereby crises are prevented."

Today, we are once again in the midst of one of these crises in the United States. How deep will it become? How much devastation will it wreak? That partly depends on how internationalized the downtum becomes.

Even Bush's economic experts, who predict an upturn soon-just as they did last year—say that their rose-colored assurances are based on the hope that the rest of the world will absorb big exports from the United States.

But much of the world is already in a downturn. The majority of the underdeveloped capitalist countries, those commonly referred to as the "Third World," are already very deep in crisis. Britain is in a severe recession. Industrial production in Germany is reportedly beginning to fall—and Germany has the strongest economy in Europe. Japan's economy is slowing, although it has not gone into the red yet.

The countries of the former Soviet bloc, where the bureaucratic caste is attempting to restore capitalism, are in a horrible crisis. Each move they make back towards capitalism makes things worse. So who is going to buy all these goods that Bush expects U.S. capitalists to sell abroad?

Marx and Engels describe an important feature of these periodic crises: In the course of the history of capitalism they tend to get worse. The grand-daddy of them all was the Great Depression in the 1930s. Then, after the Second World War, they abated in their severity, and it appeared that we could avoid really devastating "recessions."

But the period of relative capitalist stability and overall growth following the war was based in part on the enormous destruction of the war itself. The economies of Europe and Japan were in ruins, literally beaten flat. That certainly was "enforced destruction of a mass of productive forces."

Downturns have also been ameliorated by unemployment payments, social security, medical benefits, and other "social wages" the working people have won through big battles, and which the miserly capitalists thought better to grant than face workers' revolutions.

These social wages put some buying power into our pockets during crises, which keeps markets from falling even further.

But times are changing. Germany and Japan have emerged as powerful competitors of U.S. capitalism once again. International competition has intensified and can only grow more acute. There is overproduction on a world scale-the world market cannot absorb all the products the competing capitalists would be able to produce if they used all their potential capacity.

The tendency of the rate of profit to fall has once again come to the fore, driving all capitalists not only into greater competition with each other, but to seek to squeeze more profits from the San Francisco Forum: workers of the world. That means they are cutting back on the "social wage" as much as they can get away with—as well as our regular wages when we have work.

The "conquest of new markets" and the more "thorough exploitation of the old ones" no longer means opening new areas of the world for capitalist plunder, or rebuilding devastated Europe and Japan, but ever fiercer competition over already existing markets.

How much "enforced destruction of a mass of productive forces" will it mean this time for a new revival? And how long will that last before a new and more serious downturn? No one knows.

But all signs point to a world capitalist economy in the period ahead of us—during the next years and decades—of crisis and hardship for workers. Uniting to fight back is the only way forward for us, and that is the road that leads to ending this system once and for all.

----- pull-quotes -----

Learning About Marxism By Sheppara